3). A company is considering the purchase of a machine for $150,000. It is expected useful life of five years. The plant manager estimates the
3). A company is considering the purchase of a machine for $150,000. It is expected useful life of five years. The plant manager estimates the following savings in cash operating costs: Year Cash Savings $10,000 20,000 30,000 40,000 50,000 Total: $150,000 The company uses a required rate of return of 10% in its capital budgeting decisions. Calculate the followings: Net present value Payback period Accounting Rate of return. Note: 10% discount factor Table A-3 Year PV of 10% Discount Factor 1 0.9091 2 0.8264 3 0.7513 4 0.6830 5 0.6209
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